IndusInd Bank shares extend rally post strong quarter. Should you buy?
Premium- Shares of IndusInd Bank climbed more than 8% to ₹952 apiece on the BSE in Thursday's deals
Shares of IndusInd Bank climbed more than 8% to ₹952 apiece on the BSE in Thursday's deals, biggest gainer in the indices, after the lender reported a 61% jump in net profit for the quarter ended June at ₹1,631 crore on lower provisioning for bad assets. The private sector lender had posted a net profit of ₹1,016.11 crore in the year-ago period.
Its core net interest income rose 16% to ₹4,125 crore on the back of an 18% credit growth and an expansion in net interest margin (NIM) to 4.21% from 4.06%.
"IndusInd Bank reported a strong 1Q23 quarter. Loan growth was broad based spread across sectors and management indicated that while macro headwinds exist, IIB remains on track to achieve loan growth of 15-18% going ahead," said JMFinancial.
“Over the last few years, management has taken steps in the right direction (risk calibrated growth approach, retailization of deposit profile, balanced fee mix) which should start bearing fruits incrementally, resulting in improvement in return profile of the bank," the brokerage added while maintained Buy rating on IndusInd Bank shares with a target price of ₹1,270.
The Gross non performing assets (NPAs) was at 2.35% of gross advances as of June 30, 2022, against 2.27% as of March 31, 2022. The gross NPA declined from 2.88% of Q1 last year. Net NPAs were 0.67% of net advances as of June 30, 2022, as compared to 0.64% on March 31, 2022. It was lower from 0.84% as of June 2021 quarter. Its overall provisions declined 30% to ₹1,251 crore against ₹1,780 crore in the year-ago period
The bank's fresh slippages stood at ₹2,250 crore compared to ₹2,088 crore in the preceding March quarter and were driven by reverses on the consumer banking front at ₹1,647 crore.
“Rise in net slippages underlines crystallization of stress. The bank's management reiterated planning cycle 5 growth intent, hoping to achieve it via vehicle finance and microfinance. We maintain ‘Buy’ rating with a revised price target of ₹1126," said another brokerage Yes Securities.
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